10 Red Flags When Hiring a Contractor in 2026

I've been a licensed general contractor since 2017. Here is exactly what I watch for - and what you should too.

How Do You Know If a Contractor Is Legitimate Before You Sign Anything?

Go to cslb.ca.gov right now and look up their license number. Takes 30 seconds. Do this before you invite them to bid, not after you like their estimate.

Here is what you are checking:

• License status: It must say "Active." Not "Suspended," not "Expired." Active.
• License classification: A "B" license covers general building. If you are hiring a plumber, they need a C-36. Electrician needs a C-10. A contractor with the wrong classification doing your work is unlicensed for that scope - full stop.
• Bond and workers' compensation: Both must show current. If workers' comp is missing and a worker gets injured on your property, you can be personally liable for their medical costs.

According to CSLB complaint data, the board processes roughly 20,000 consumer complaints per year in California. The majority involve contractors who were either unlicensed, improperly classified, or had lapsed bonds. That is not a small number.

As a licensed GC, I can tell you that at least 1 in 4 homeowners I talk to have either hired or nearly hired someone who was not properly licensed for the specific work being done. They did not know because they did not check.

If you want to skip the manual lookup, Opsite's free license checker at useopsite.com pulls the live CSLB record instantly - license status, bond, workers' comp, classification, and any disciplinary history. It runs in seconds and saves you a serious headache later.

Why Should the Lowest Bid Scare You More Than Excite You?

Get three bids. Not two, not one. Three. And if the lowest bid is 30% or more below the other two, that is not a deal - that is a contractor who will make up the difference in change orders, or one who is planning to cut corners on materials and labor you will not see until it is too late.

Based on 2026 construction cost data from Bay Area projects, a full kitchen remodel runs $80,000 to $180,000 depending on scope, finishes, and layout changes. A bathroom renovation ranges from $25,000 to $75,000. If someone comes in at half that price, ask yourself where the difference is going.

From working with homeowners on projects ranging from $50K to $2M+, I have seen this pattern repeat itself: the contractor who wins on price almost always ends up costing more by the end. The margin they cut from the bid comes back as change orders - one for rock discovered under the slab, one for "code upgrades" that every other contractor priced in, one for materials that suddenly cost more than quoted.

The estimate itself is a red flag test. A legitimate bid is itemized - labor by phase, materials by brand or grade, allowances clearly labeled as allowances. If you get a one-page PDF with a single number at the bottom and the words "kitchen renovation per discussion," that contractor has given themselves maximum room to charge you more later.

What Payment Terms Should Make You Walk Away Immediately?

In California, a licensed contractor cannot legally ask for more than $1,000 or 10% of the contract price as a down payment - whichever is less. That is state law under the Contractors State License Board regulations.

If a contractor asks for 30%, 40%, or 50% upfront, they are either unaware of the law (bad sign for a licensed contractor) or they need your money to fund a different job that is already in trouble. Either way, walk away.

Other payment red flags:

• Cash only: No paper trail. If a dispute ever goes to arbitration or court, cash payments are very hard to document.
• Payment not tied to progress: A proper draw schedule links each payment to a completed phase - foundation, framing, rough-in, drywall, finishes. If they just want money on dates regardless of what is done, you have no leverage if work falls behind.
• No retention or retainage clause: Industry standard is to hold back 5-10% of each draw until the job is complete and the punch list is signed off. This is your only real enforcement tool.

A draw schedule is not optional - it is how you keep control of a six-figure project. If you are not familiar with how they work, read our breakdown at useopsite.com/blog/what-is-a-draw-schedule-construction before you sign anything.

In my experience building homes across Silicon Valley since 2017, the single most common scenario where homeowners get burned is overpaying early and losing leverage. Keep your money until the work is done. That is what a draw schedule is for.

What Does It Mean When a Contractor Refuses to Pull Permits?

It means they want to skip the inspections. And that is never your friend - it is your liability.

Any structural work, electrical, plumbing, HVAC, or addition requires a building permit from your local building department. No exceptions. A contractor who says "we can skip permits to save time and money" is transferring risk onto you in ways you may not discover for years.

Unpermitted work creates real problems:

• Your insurance company can deny a claim on unpermitted work if it causes a loss
• When you go to sell, a buyer's inspector will flag unpermitted additions - and your buyer can walk or demand a price reduction
• If a city inspector discovers unpermitted work during a future remodel, you will be required to tear it out and redo it to current code at your cost - even if you did not commission the original work

As a contractor, I can tell you that I've seen homeowners discover $50,000 in unpermitted additions when buying a house - work done years earlier by the previous owner's contractor. The original seller saved a few thousand dollars and a couple weeks. The buyer paid for it in cash at closing. Do not be on either end of that transaction.

Permit fees in California typically run 1-3% of the construction value. On a $120,000 kitchen remodel that is $1,200 to $3,600. Any contractor who frames that as the reason to go permit-free is not being straight with you.

How Do You Spot a Contractor Who Will Hit You With Change Orders Later?

Read the contract scope before you sign it. Vague language is not an accident - it is how contractors leave themselves room to charge more later.

Here is what legitimate change orders look like: unexpected conditions discovered once work begins - rot behind a wall, code violations on existing work that must be brought up to current standard, soil conditions that require a different foundation approach. Those are real. Those happen. You should budget a 15-20% contingency for exactly that reason.

Here is what a contract red flag looks like: a scope of work that says "kitchen renovation per our discussion" with a dozen line items listed as "allowance - TBD." Allowances are estimates for things not yet selected (tile, fixtures, appliances). A contract full of allowances with no explanation of what happens when actual costs exceed them is a blank check.

Specific things a solid contract must include:

• Materials specified by brand, model, and grade - not "standard grade cabinet boxes"
• What happens when an allowance is exceeded (who pays, how is it documented, what is the process)
• A clear change order clause: all changes must be in writing, signed by both parties, before work begins
• Lien waiver requirements at each draw so subcontractors and suppliers cannot put a mechanic's lien on your property after you have already paid the GC

When you receive a change order mid-project, Opsite's Change Order Analyzer lets you upload the document and checks every line item against current California market rates. It flags pricing that is above market, identifies scope that may already be covered by your original contract, and generates a ready-to-send negotiation response. Learn more at useopsite.com/features.

Based on typical project data from Bay Area contractors, change orders add an average of 12-18% to the final contract value on projects where the original scope was loosely written. On tightly written contracts, that number drops to 4-7%. The contract language matters.

What Are the Warning Signs During Construction That You Are Already in Trouble?

Your GC should be reachable within 24 hours, period. If they take 48 or more hours to return a text or call during active construction, that is a red flag - not a personality quirk. It means something is wrong with their bandwidth, their finances, or their attention to your job.

Other mid-project warning signs:

• The crew changes completely: The subs who showed up in week one are gone, replaced by people you have never met. This often means the original subs walked because they were not getting paid.
• Work stops with no explanation: A day or two of no activity can be normal (waiting for inspections, material deliveries). Five or more consecutive days of zero progress with no communication is a serious warning sign.
• Materials show up that do not match the spec: If you specified a particular tile and something different arrives, address it immediately in writing before it gets installed.
• Your contractor asks for more money ahead of schedule: If they are asking for the next draw before the phase it covers is complete, they are running their business on your money.

Platforms like Opsite give homeowners real-time visibility into project timelines, documents, and contractor communications so you know what is supposed to happen and when - which means you can spot a deviation the moment it starts. You should not have to chase your contractor to understand the status of a six-figure project. For more on how modern construction operations work, see useopsite.com/blog/complete-guide-construction-business-operations.

If work stops completely and your GC goes silent, do not wait more than 5 business days before sending written notice - email with read receipt is fine - stating that work has stopped and demanding a restart date or written explanation. Document everything. You may need that paper trail if the situation escalates to a CSLB complaint or a mechanic's lien dispute.

Add 15-20% contingency to every remodel budget. Not 10%. Not "we will figure it out." 15-20%. Every single project I have ever run or reviewed hit something unexpected. The homeowners who planned for it came through fine. The ones who did not spent weeks stressed about money instead of focused on decisions that actually affected the quality of their home.

Frequently Asked Questions

What is the legal maximum deposit a contractor can ask for in California?

California law limits the initial deposit on a home improvement contract to $1,000 or 10% of the contract price, whichever is less. This is a hard cap under CSLB regulations. If a contractor asks for more than this upfront, they are in violation of state law and you should not proceed.

How do I check if a contractor is licensed in California?

Go to cslb.ca.gov and enter the contractor's license number. The lookup shows license status, expiration date, bond information, workers' compensation status, and any disciplinary actions on record. This takes about 30 seconds and should be the first thing you do before inviting anyone to bid.

Is it a red flag if a contractor asks for cash only?

Yes. Cash payments create no paper trail, which is a problem if a dispute ever goes to arbitration or court. Always pay by check or bank transfer and keep records of every payment tied to the phase of work it covers.

How many bids should I get for a remodel?

Three bids minimum. Not two, not one. Three. Getting three bids gives you enough data to understand the real market price for your project. If one bid is significantly lower than the other two, that gap is the story - find out why before you chase the cheap number.

What is a lien waiver and why does it matter?

A lien waiver is a document signed by a subcontractor or supplier confirming they have been paid and give up their right to file a mechanic's lien against your property. Without lien waivers, you can pay your general contractor in full and still have subs or suppliers place liens on your home because the GC did not pay them. Require conditional lien waivers from all major subs at every draw.

Do I need permits for a kitchen remodel?

In almost all California jurisdictions, yes - if you are moving walls, changing electrical, relocating plumbing, or adding ventilation. Cosmetic updates like painting or refinishing cabinets typically do not require permits. When in doubt, call your local building department directly and ask. They are not there to catch you - they are there to answer exactly this question.

What should I do if my contractor stops showing up?

After two or more days of unexplained stoppage, reach out in writing - text and email - and ask for a restart date. If you get no response within 5 business days, send a formal written notice (email with read receipt) documenting the stoppage. If the abandonment continues, you can file a complaint with the CSLB and the contractor's bond company. Keep records of every payment you have made.

What is retainage and should I use it?

Retainage (also called retention) is a percentage - typically 5-10% - held back from each progress payment until the project is complete and you have signed off on the punch list. It is your enforcement mechanism. Without retainage, you have no financial leverage once a phase is complete. Include a retainage clause in your contract before you sign.